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Should Everyone have a Financial Plan?

The stock market has been rising continuously for the last 10 years.  This is the longest bull run in history.  There is lots of talk about an impending correction (drop in value).  Should you be worried and if so, what can you do about it?

 

At the outset we should remind everyone that investing is a long term game.  We should never be too interested in short term investment performance or minor fluctuations in value.

 

So what is the best way to protect your self in the event of a prolonged market decline?  It is to sit down with a Certified Financial Planner and give him the following information:  Income, Assets, Liabilities, Expenses, Pensions, Investments, Property, Cash Savings, Debt etc.   He will then put together a plan that will answer many questions including the following:

  • What rate of investment return do I need to achieve, so I can lead the life I wish to lead?
  • Am I taking the correct amount of risk on my investments?
  • Will my desired lifestyle be destroyed in the event of a prolonged market decline?
  • How much do I need to be saving every month so that I have enough money for my retirement?
  • If the stock market drops by 25% will I run out of money in my retirement?

 

Knowing the answers in advance to these questions really protects you, should the worst happen.

 

We in Mason Wealth Management regularly meet new clients who are taking more risk than they need to.  They already have more money than they need to live their desired lifestyle, so why should they be putting that money at risk to try and achieve a return that is not needed.  A plan identifies this sort of poor financial behaviour – before it is too late.

 

In addition to having a plan, investors could also do the following:

 

  1. If you have known expenses over the next 3-5 years, that amount should really be left in cash.  Do not invest this money.
  2. Successful investors generally “act” by putting a financial plan in place, whereas failed investors generally “react” to the markets and also the media.  Typically they do not have a plan.
  3. Recognise that if you are a saver (pre retirement rather than post retirement) a correction in market represents a great opportunity for you to invest additional monies in the market – at a discount.  Many people miss this great opportunity.

 

In conclusion, if you do not have a financial plan please give us a call today at 01-4984960.  We will put together a detailed voyant plan for you at a very modest cost.  Wasn’t it the great Roy Keane who said “fail to prepare – prepare to fail”.